100% Deduction for Business Meal Expenses through 2022
The IRS has issued temporary guidance on tax relief for businesses to claim a 100% deduction for business meal expenses from restaurants.
DATES FOR TEMPORARY 100% F&B DEDUCTION
The Taxpayer Certainty and Disaster Tax Relief Act of 2020 provides a temporary exception to the 50% limit on the amount that businesses may deduct for food or beverages. With the updated guidance, there will be a temporary 100% deduction for food and beverage expenses provided by a restaurant and paid from January 1, 2021 through December 31, 2022. To qualify for the 100% deduction, a business owner or an employee of the business must be present when the food and beverages are provided. In addition, the expense cannot be lavish or extravagant under the circumstances.
USE QUALIFYING RESTAURANTS TO CLAIM 100%
The IRS has also provided guidance on what type of restaurant will qualify a business to claim 100%. Restaurants and businesses that prepare and sell food or beverages to retail customers for immediate on-premise and/or off-premise consumption are included in the 100% deduction. Businesses that primarily sell pre-packaged goods not for immediate consumption, such as grocery stores and convenience stores are not included in this guidance.
To read IRS Notice 2021-25, please click here.
To read IRS News Release 2021-79, please click here.
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